NPS (National Pension System) was introduced by the Central Government to help the individuals have income in the form of pension to take care of their retirement needs.
The Pension Fund Regulatory and Development Authority (PFRDA) regulates and administers NPS under the PFRDA Act, 2013.
NPS is a market-linked defined contribution scheme that helps you save for your retirement. The scheme is simple, voluntary, portable and flexible. It is one of the most efficient ways of boosting your retirement income and saving tax. It allows you to plan for a financially secure retirement with systematic savings in a planned way.
NPS is available to all the citizens of India and offers different models depending on the following user segments :
As per the notification of the Ministry of Finance dated 5/7/2003-ECB-PR- dated 22nd December 2003, NPS is mandatory for Central Government employees, who joined service on or after January 1, 2004, except for those in the armed forces and is also extended to the employees of Central Autonomous Bodies from the said date. It is also available to all State Government employee/employees of State Autonomous Bodies, if the respective State/UT opted for it.
NPS can be voluntarily adopted by the corporate for their employees and contributions are made to the NPS account as per the terms of employment. NPS voluntary model is available to all the citizens of India including those residing abroad, between the age of 18 and 70 years.
Benefits of NPS
1) Flexible
2) Simple and Tax efficient
3) Portable
4) Regulated and Transparent
5) Dual benefit of Low Cost and Power of Compounding and
6) Online Access
1) Flexible
2) Simple and Tax efficient
3) Portable
4) Regulated and Transparent
5) Dual benefit of Low Cost and Power of Compounding and
6) Online Access
Types of Accounts: NPS scheme is structured into two tiers
Tier-I account: This the permanent retirement account into which the regular contributions made by the subscriber and/or their employer and are credited and invested as per the scheme/fund manager chosen by you. It is an Individual Pension Account. Minimum contribution to open is Rs 500 and minimum contribution per year is Rs 1000. AMC charges are applicable. Switching to Tier II is restricted subject to Exit and Withdrawal Regulations
Tier-II account: This is a voluntary/optional withdrawable account which is allowed only when you have an active Tier-I account. The withdrawals are permitted from this account as and when you require. It is an Optional Account and requires an active Tier-I account. Minimum Contribution to open is Rs 250/-, there is no restriction on minimum contribution per year. No separate AMC charges are applicable. Switching to Tier-I is allowed anytime.